You may have been hearing a lot more about bitcoin these days. It’s being lauded as a completely anonymous and (for ease of terms) decentralized currency. In essence, sending someone bitcoins for an online purchase would be similar to handing someone cash. There are no banking fees and no ways to link the money exchange to any specific transaction. Revolutionary, right?
Possibly not. Adam Cohen, an Internet Economist for SeatGeek, recently weighed in on Quora:
Bitcoin is a ludicrously bad idea. It is a scam. A Scam. It is not a currency. The economic assumptions underpinning the Bitcoin ecosystem are laughable, and ignore hundreds of years of accumulated understanding of how currencies work with each other.
The rest of his answer, as well as his follow up on Hacker News, go on to support this claim. His arguments include the way in which bitcoins are initially distributed, built in deflation, and no convertibility. All of which are complete common sense points for even us non-economists.
So much for toppling the world economies, huh?
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